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First time buyers need to know these tips
Build your credit historyImprovements to your credit score are not guaranteed. Missing payments to Loqbox or other credit accounts may harm your score.
People often say that “Home is where the heart is.” But buying your first home can be an emotional experience. These days, first-time buyers face all sorts of obstacles. And at Loqbox, we’re here to help you overcome them.
A nation of homeowners?
It’s getting harder for young people to escape the rent trap
Young people in the UK are facing an incredibly tough housing market. The cost of living crisis is putting pressure on our monthly spending. That makes it harder to cover the essentials and think ahead to the future.
And as if rising costs weren’t enough to contend with, 40% of people under the age of thirty are spending almost a third of their income on their rent according to the BBC.
So it’s no surprise that it’s getting harder to get on the property ladder. Many people feel as if they’re trapped in a bit of a cycle — spending most of their wages on rent but being unable to prove to lenders that they can afford a mortgage. And financial pressures make saving for a deposit harder too.
But everyone deserves the chance to own their own home
You deserve to live in the home that’s right for you
We all have different hopes and aspirations for the future. While some of us might enjoy the freedom that comes with renting, many others dream about owning a place of their own.
At Loqbox, we believe that everyone deserves access to the tools and the knowledge they need to reach their financial goals. So in this article, we’ve shared some tips to help you overcome the challenges you might face as a first-time buyer in today’s housing market.
Top tips for first-time buyers in 2022
1. Start building your credit history
When buying a home, most of us need to apply for a mortgage. And before a lender offers you a deal, they’ll want to see evidence that you’re a responsible borrower.
To do this, mortgage lenders look at your credit history. This is a record of how you’ve managed credit in the past, and it includes things like credit cards, loans, overdrafts and utility bills).
You’re more likely to be offered an affordable mortgage if you have a good track record of keeping on top of credit repayments. So an improved credit score could mean you get a higher mortgage limit, or a more competitive interest rate. And that could save you money in the long run.
So if you need a mortgage, check your credit score with the credit reference agencies. In the UK, the main ones are Equifax, Experian, and TransUnion. If your score is less than “good”, or “poor” or “fair”, it’s a good idea to build your credit history before you start searching for your dream home.
And if you need some help building your credit history, you’ve come to the right place. Loqbox membership gives you all sorts of ways to improve your credit score. And there’s no hard credit check when you sign up.
With Loqbox Save, you can use your savings to build your credit score. We report your payments to the three main credit reference agencies, showing them that you’re managing your money responsibly. It’s the easy way to start growing your credit history before you apply for a mortgage. And you can get started by saving as little as £20 per month.
2. Get recognition for paying your rent on time
With so many of us spending much of our hard-earned cash on rent, trying to save for a mortgage deposit can be really frustrating.
You might be thinking, “How am I expected to save for a deposit, stay in control of my spending, pay the bills and build my credit history?”
If that sounds like you, it’s time to get the credit you deserve for paying your rent on time. Whether you’re renting from a letting agency, a private landlord, or even your parents, Loqbox Rent helps you build your credit score while you rent.
It’s easy to set up, and we report your rent payments to Experian.
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3. Start saving for a mortgage deposit
Saving for a deposit can feel really intimidating. But as will all habit building, it helps to start small.
Begin by setting a goal. Take some time to think about where you might want to live, and how much you might need to put down up front. Your deposit will usually need to be at least 10% of the full value of the home, but a 20% deposit could let you access more attractive rates.
Once you have a number in mind, break it down.
How much do you need to save each month if you’d like to buy a home in a few years’ time? Do you already have any savings – outside of your emergency fund — that you could put towards your target? Could you make changes to your budget so that you can save more towards your future home?
And if you’re under 40, think about saving using a Lifetime ISA. With these accounts, the government adds a 25% bonus to your savings, up to a £1,000 per year.
Loqbox members get access to a personalised financial plan.
4. Stay calm and take your time
Rome wasn’t built in a day. (And hopefully your future home won’t have been either!) So remember to stay calm and do things in your own time.
In a seller’s market, it can be tempting to rush into decisions. But don’t make an offer on a home if you don’t like the location, you feel that it’s overpriced, or you can’t see yourself being happy there.
Check the sale price of similar properties in the area by checking the Land Registry. You’ll also be able to see how much your chosen property sold for in the past. That could help you judge whether you think any improvements made by the existing owner justify the price of the home.
Invest in a good quality home survey. Most mortgage lenders require you to pay for a survey to make sure the property is in good condition. But even if you’re not buying a home with a mortgage, getting a survey done could prevent costly surprises in the future.
Being prepared will give you the best chance of getting the home that’s right for you. Once you’re ready to begin your house search, remember that you’re in control of the process.
The first step towards your new home…
Small steps towards a richer future
We hope this article has helped you feel more confident about buying a home.
And we would love to help you as you work on building your credit history, improving your money confidence and getting started with saving.
Loqbox has already helped 1 million people improve their relationships with money. So why not get started by building your credit history with Loqbox Rent today?
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